, Employment & Training Administration (ETA)

Boston Regional Conference

Friday, June 18, 2004
Portsmouth, NH

Thank you, Kathy. It's a pleasure to be here. And thank you all for juggling your schedules on such short notice as we Americans honored and remembered one of our great leaders last week.

President Reagan will be remembered for many things but two traits, above all else, stand out for me. First was the courage and determination he possessed to confront and defeat Communism. And second was his conviction that the ingenuity and innovative spirit of the American people held the key to economic recovery.

It is this innovative spirit that continues to drive our economy today. The genius of our free market economy is its ability to nurture this innovative spirit and make it bear the fruit of jobs and prosperity. In this generation, as in the past, entrepreneurs and innovators are drawing on our well educated workforce, our large and diverse economy, our technological capability and our financial sophistication to create the new industries and jobs that will make America grow and prosper in the 21st century.

From my vantage point, in the workplace, innovation really boils down to one four-letter word - jobs. 1.2 million new jobs have been created since January 2004. Last month 248,000 jobs were added, with virtually every sector of the economy showing strength.

Manufacturing showed impressive growth, with 32,000 new hires in May. That's the fourth straight monthly increase for the manufacturing sector and the biggest since August, 1998.

And the unemployment rate held steady at 5.6% even as thousands of new job-seekers entered the labor market. New England's economy performed even better as its unemployment rate fell to 5.4%, the lowest in over two years.

As the economy continues to grow and fuel more innovation, jobs emerge that demand higher skills, and pay higher wages than ever before.

How can we get ready to meet the workforce needs of the future?

These needs will be very different than those we have encountered in the past. Workforce needs track the economy's significant transformation. Industries such as manufacturing and retail now need workers who understand computers and robotics and supply chain management. Fields such as health care and construction need more skilled labor than ever before.

Newer industries like biotechnology and geospatial technology have emerged, and others that are today just the gleam in the eye of some innovator soon will. The jobs of the future, at virtually every level, will need to be filled by "knowledge workers," who have specialized skills and training.

In fact, the demand for knowledge workers is already growing at an astonishing pace. The Employment Policy Institute reported that almost all of the net new jobs created in the economy between 1992 and 2002 required at least some post-secondary training.

Workers in traditionally blue-collar industries now need specialized training to work with advanced robotics and computerized production lines. Even employees who have advanced degrees need to keep learning and upgrading their skills to keep pace with the competition and open up new opportunities.

The conventional wisdom holds that coming out of a recession, there are more workers than jobs available. The Federal Reserve calls this "slack in the labor market." Yet, we are already hearing reports that companies are having difficulty filling jobs with workers who have the skills they require. Within ten years, some analysts predict a 33 percent shortfall in graduates with bachelor's or higher degrees.

During that same ten year period, another event is going to have a profound impact on the labor force. The impending retirement of the baby boomers means that nearly 7 million people who currently hold key managerial, professional and technical jobs may retire over the next ten years.

In a knowledge-based economy like ours, a top priority for all of us must be to ensure that we have the skilled workforce we need to spur economic growth and productivity. You in the private sector make an enormous investment both in training new workers as well as keeping current the skills of those already on the job.

The American Society for Training and Development, with more than 70,000 members worldwide, reports that despite the economic challenges facing private industry in 2002, the average organization invested more in employee training as a percentage of payroll and delivered more hours of training to employees than ever before.

This growing investment of the private sector in employee education and training reflects its understanding that the investments made in improving the skills of the workforce translate into a competitive advantage.

While the private sector invests the large majority of funds that train our workforce, it is not alone. As the Assistant Secretary for Employment & Training, I oversee the nation's public workforce system. What used to be known as your local unemployment office is now a nationwide network of 3500 One Stop Career Centers in which the taxpayers invest over $15 billion a year.

Individuals can go to any one of these centers and access job postings, learn about the local labor market, and, after meeting the necessary eligibility requirements, obtain vouchers for training. While this sounds good, all too often the local workforce system is divorced from the local economy and irrelevant or even unknown to local businesses.

If our system is going to make a difference in this global economy, we need to become matchmakers to the jobs of the future. We simply can't justify the investment the American taxpayer makes in this workforce system if we are training people for jobs in last year's want ads.

That type of change does not happen overnight though and it does not happen without strong and active leadership. President Bush has committed his Administration to lead this change on several fronts.

First, to help affect change in any system, you need to do more than just talk about it; you need to demonstrate it. The President's High Growth Job Training Initiative does exactly that.

This Initiative focuses on a dozen key industries that are projected to add many new jobs or experience significant transformation in the skills required of workers in those jobs. This is an information-intense initiative.

We begin by conducting extensive research about each industry to understand how it's organized and who the important players are. Then we conduct a series of executive forums with leaders from industry, labor, and associations to understand the workforce challenges that face the industry.

Finally, we meet with the industry's human resource professionals and educators to discuss the challenges that have been identified and develop an array of model solutions that meet these challenges.

The powerful partnership of employers, educators, and the public workforce system helps to determine what specific solutions we fund. Over the past several months, Secretary Chao has announced national investments in preparing workforce with the skills needed to succeed in both the health care and biotechnology industries.

There are two common features found across all these solutions. First, each includes partnerships that unite the workforce system, the business community, and the education system. And second, each partnership focuses on a solution in one of the following seven areas:

Only by engaging in partnerships with education and employers can the workforce system provide the solutions in these areas and supply the skilled workers that employers demand and the good jobs with career opportunities that workers seek.

This is government though, so you know it can't be that easy. We have built up 70 years of laws, rules and regulations that govern exactly what services we can provide to whom, and with which dollars.

To free the innovative spirit of this system, President Bush has proposed a series of reforms that provide states with the flexibility to design a system that best meets their needs.

The first reform is the reauthorization of the Workforce Investment Act. The Workforce Investment Act is the governing legislation for the public workforce system and the law that defines nearly every action taken in a One Stop Career Center.

Different forms of the reauthorization have passed the House and the Senate and are now awaiting reconciliation by a conference committee on Capitol Hill. Whenever the final legislation emerges, it must contain the flexibility to allow states to design systems that best meet their needs and the responsiveness to keep up with business in this global economy.

The second reform was just announced by the President this past spring. It provides a blueprint for a workforce system lean enough to double the number of people it trains and flexible enough to ensure customized curriculum in that training.

I won't bore you with the details of these proposals, but I do fear that without the reforms that they bring, our public workforce system will be increasingly seen as a grantsmaker and middleman, divorced from the reality of tomorrow's economy and irrelevant to tomorrow's employers.

But if we are successful, the innovative spirit of the fine men and women in our system will blossom. And from it will come a system that occupies a pivotal role in securing our nation's economic future by developing the human capital upon which jobs and growth depend.

Even more important, we will be helping workers gain not just jobs, but careers, in industries that are poised to offer good wages and opportunities for many years to come.

Thank you all for joining me today and I'll be happy to answer any questions that you may have.